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Tuesday, June 19, 2012

When innocent parties are held liable for environmental contamination

The Ontario Divisional Court has recently released a decision affirming the authority of the Ministry of the Environment to hold a party liable for clean up of contamination even though that party was not at fault.  As the Court explained: "The appeal centres on the question of what are the appropriate considerations in making a clean-up order under the Act, against an owner of contaminated land who had no responsibility whatsoever for the contamination."

Several hundred litres of furnace oil had leaked from the basement of a privately owned property located in the City of Kawartha Lakes.  The oil seeped onto property that the City owned and from there had the potential to adversely affect Sturgeon Lake. The Ministry of the Environment (MOE) ordered the private property owners to remediate the damage. The owners, who had limited financial resources, made an insurance claim, but their insurance funds ran out before remediation could be completed on the City property. The MOE then ordered the City to clean up the contamination on its property and to prevent discharge of the contaminant from its property.

The City appealed the order to the Environmental Review Tribunal (ERT), which refused to allow the City to call evidence directed at proving the City's innocence and determining who was actually at fault for the contamination.  The Divisional Court upheld this decision of the ERT, finding that earlier decisions of the ERT related to fairness (e.g. it would not be fair to hold an innocent party responsible for the costs of clean up) had been supplanted in large part by the MOE Compliance Policy. 

The Compliance Policy states that the "fact that an owner of a contaminated site may have purchased it without notice of the presence of contamination is irrelevant to the purpose of the Ministry legislation [the Environmental Protection Act] and generally will not be considered by the statutory decision-maker to be grounds for relieving that owner from liability under a control document."  According to Section 2 of the Policy, an innocent or "victimized" owner will not be relieved of liability.  If an exceptional or unusual circumstance existed, the timing and content of such an order could be varied - but not whether the order should be issued in the first place. 

The Divisional Court also rejected the argument of the City that the ERT's decision violated the "polluter pays" principle and, therefore, that the decision could not stand.  The Court instead pointed to Section 157.1 of the Environmental Protection Act, which it says "can be accurately described as an 'owner pays' mechanism".  The section makes no reference to fault.  It gives the provincial officer the discretion to make an order against an owner if the officer reasonably believes that the order is necessary or advisable to protect the environment.  The ERT had found that the MOE had acted reasonably in making the order against the City, and the Divisional Court agreed.

Read the decision at: The Corporation of the City of Kawartha Lakes v. Director, Ministry of the Environment.